I too have a serious problem installing the latest nVidia driver, but also older drivers on a 3.6.x kernel. Somehow it doesn't play well with the sources nor X11...

To get at least some decent resolution, in your case I'd install the nv or nouveau driver and remove any xorg.conf file in /etc/X11. It's not ideal (no 3D, thus no Google Earth ) but at least it's better then VESA resolution...

I managed to get around the problem. The desktop machine that I use for work uses windows and has two 12 inch monitors I swapped one of them for the 17 inch on the linux machine now the linux machine can use higher resolutions, currently 1280 x 1024.

The monitor now connected to the linux box is a philips 170B4, luckily I have several monitors but for someone who has just the one this could have been a major problem and put them off Linux.